More businesses in the UK are planning redundancies by restructuring as they face growing costs and an economic slowdown.
According to a recent news report, rising expenses linked to last autumn’s Budget means many businesses are grappling with cost pressures. Even large retailers are planning redundancies.
And just last week, the UK’s economic growth was downgraded, meaning companies of all shapes and sizes are looking at how to make savings and reduce outgoings.
Restructuring a business sadly means there may be some redundancies. That’s because staff costs are usually the biggest business expense. So, it means it is often the first area to look at when reducing expenses.
No business owner wants to make cuts. But if the company folds, even more people could be out of work – and that often makes it a necessary evil. If you are in the unfortunate position of needing to make redundancies by restructuring, here are our tips.
How to make redundancies by restructuring
First of all, let us look at what restructuring means. When a company needs to restructure it looks at the changes it can make to its financial or operational structure.
According to Investopedia, this often happens when a business is under financial distress. But it is also carried out when a company is being sold, prior to a management buyout, a change in ownership or a change in overall goals. The result is that many employees are laid off due to the company needing to downsize.
Restructuring a business is stressful for everyone within the company, not just employees. Directors often have to take tough decisions. And when it comes to making redundancies, it is even more stressful to relay that message.
The key to making redundancies is to keep communicating with employees. And here’s why.
Why it’s important to communicate during restructuring
There are many ways to reduce costs in a business if it is under financial pressure. Making changes to make it more profitable in the long run is a necessary approach.
If reducing your workforce is essential, then keeping everyone in the picture is equally essential. Having the right HR culture in place helps reduce the difficulty when communicating any change. And even in the most difficult of circumstances, your team will appreciate your honesty. Of course, there are times when you need to keep things confidential. But don’t keep your team in the dark.
Communicating restructuring
Your first decision when it comes to communicating is timing. It’s a good idea to communicate restructuring as soon as possible. This will prevent information ‘leaking out’ which then creates uncertainty and untrue rumours being spread. This can create distress to all employees, whether their position is safe or not. Be clear on the following points:
- The timeline
- How the company will operate
- How employees can help or adapt to the changes
- Whether there will be rewards or incentives to employees involved in the restructure
You will need to meet with employees regularly to keep them up to date. That doesn’t mean they need to know every last penny in detail, just how far along the restructure you are.
A good HR culture in business will mean you are fair to everyone involved. You don’t want anyone leaving with a bitter taste because they were kept in the dark. If they understand that the cost pressures are down to the market condition or increasing taxes, they are more likely to understand your predicament.
Hold specific meetings
One of the best ways to communicate is in meetings held specifically about the restructure. Sending emails or newsletters can be open for interpretation.
Allow an open dialogue. Always allow questions and ask for thoughts. This will help employees feel like they are being included and you are not simply giving orders.
This approach will help increase a feeling of honesty between all parties and your workforce will trust you and your motivations.
Even employees who are remote should be included. Using Teams or Zoom so they are part of the meeting is perfect if they cannot attend in person. Genuine and transparent conversations are always the best.
Consider your employees emotions
Whether someone is likely to be made redundant or not, it will affect your entire team. Losing other team members can impact team morale, especially if someone has built a good working relationship with another employee. Some employees will feel like they are losing friends or family.
As well as keeping everyone updated in meetings, ensure your communications team writes regular email or letters. This is especially worthwhile if your business is well known, as speculation from the public on social media won’t help your team. And it won’t help your business if it appears to be in a more difficult situation than it really is. You don’t want to worry clients or customers any more than you do employees.
Help employees who stay with you
Any employees who keep their jobs may still harbour concerns. It is sensible to communicate how you envisage the future. Be honest, but also be as positive as possible. You need to keep employees who know their jobs well as this will help with any changes.
For example, some employees may be asked to take on a little extra work for a short period of time. Others may take on new responsibilities. It is imperative to let employees know that there they have a future as does your company.
Offboarding
Onboarding is important, but offboarding is equally so. A company with a good HR culture should see that employees leave in the best possible way, even in difficult economic times.
Communicate clearly the reason for their redundancy in private. If you are in the unfortunate position of losing employees, offer to help them find work. This will preserve a good reputation. You don’t want to lose that at such a key moment in the company’s lifecycle.
Get help
If you’re unsure about handling redundancy when restructuring, you can speak to our team. We offer bespoke services that will ensure your business follows the correct legal procedures as well as creates the right culture so both you and your team can move on from such a difficult time.